Where to buy real estate in Canada 2021: Overview

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HSBC Bank

Buying a home is a major financial milestone for many Canadians; owning a property doesn’t just provide them with shelter, but is usually the largest asset in their portfolios, too. With gains outpacing most money markets, a homeowner’s equity can provide capital for anything from home renovations to retirement planning.

And amid the onslaught of the global pandemic, home has become so much more than a place to live. For many, where we live has also become our office, school, gym and restaurant. It’s where we have sheltered in place to prevent the spread of the COVID-19 virus, in hopes of keeping ourselves, our loved ones, and our communities, safe.

“As the pandemic has made homeownership more important than ever, it has driven new trends in home buying psychology,” says Lauren Haw, CEO and Broker of Record at Toronto-headquartered Zoocasa Realty. “More buyers are looking to upsize their homes and are looking to markets where it’s most affordable to do so. As well, the ability to work from home has untethered many from living near business centres, and has offered buyers the flexibility to relocate [farther afield] to markets they may not have previously considered.”

How COVID “supercharged” the Canadian housing market

This new urgency has “supercharged” what was already a frothy housing market, according to the Canadian Real Estate Association. Initially, the shock of lockdowns and economic uncertainty did cause a nationwide lull between February and March 2020, with sales and listings plunging 14.3% and 12.5%, respectively. However, the market recovered to normal seasonal levels by June 2020, with sales soaring 15.2% year over year, and 63% from May 2020—much faster than the industry had anticipated.

Buyers venturing outside their current regions to find a dream home have brought big city market dynamics with them. Formerly sleepy small towns are now grappling with a rapid depletion of inventory, bidding wars and homes selling for considerably higher than they were listed for, both due to overwhelming demand and the practice of pricing properties artificially low to attract more potential buyers and sparking a bidding war. The latter is a tactic frequently used in larger urban markets, and had not been typically seen in small towns prior to the pandemic.    

Conditions across the country came to a head in March of this year, when CREA reported the highest level of home sales ever, up 76.2% from the pit of the lockdown, with the average price across all home types (including one- and two-storey single-family homes, semi-detached homes, townhouses, and condos) up 31.6% year over year to an average of $716,828. Single-family homes experienced the largest price increase annually, with the benchmark up 25% to $795,700, with similar increases for ground related housing with greater square footage; townhouse prices rose 18% to $586,700 nationally. However, the condo sector bore the brunt of buyers’ fears early on in the pandemic, as people living within close proximity was considered a health risk; the price benchmark grew just 5.3% to $498,000 year over year.

The national sales-to-new-listings ratio (SNLR), which measures the level of buying competition in the market, sits at a scorching 80.5%, indicating steep sellers’ conditions, with more than 80% of Canada’s markets considered “unbalanced” in terms of supply and demand.

This is sounding alarm bells for policymakers, prompting the Canadian government to take action to cool sizzling price growth: A new national foreign buyer tax was introduced in the most recent federal budget, while the banking regulator has proposed a tougher mortgage stress test, to take effect in June of 2021.

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Where will today’s homebuyers find the best value?

Amid these shifting trends, how should aspiring buyers approach the market? MoneySense, in partnership with Zoocasa—a full-service tech brokerage that provides Canadians with the data they need to make informed buying and selling decisions—has compiled the 2021 edition of Where to Buy Real Estate, revealing which markets offer the greatest value and potential for appreciation over time. The study looks at 45 major urban centres across the country and the top three neighbourhoods in key regions, giving prospective buyers insight into the best real estate destinations, both locally and for those considering a long-haul move.

Without further ado, here are the three top-ranked cities for purchasing real estate in Canada in 2021.

1 – BANCROFT, ONT.

Bancroft has received top billing in MoneySense’s 2021 edition of Where to Buy Real Estate, with a score of 4.54 out of 5 stars. (Our scoring system and methodology are detailed below.) Known for its proximity to Algonquin Provincial Park and prime Ontario cottage country, Bancroft has long been a vacation locale for those looking to escape the pace of city life. With the onslaught of the COVID-19 pandemic and the resulting increase in remote work, however, the town offers attractive incentives for those looking to make it a permanent destination.

Why we’re watching Bancroft

While it may have small-town charm to burn, Bancroft is actually an economic powerhouse with a skilled local workforce, thriving downtown core and all the amenities of a larger city such as a vibrant retail and dining scene, art and theatre, schools and healthcare. It is conveniently located between Toronto and Ottawa, and sits at the intersection of Highways 28 and 62 with easy access to Highway 401, and even has its own small airport.

Perched on the York River at the north end of Hastings County, Bancroft got its start as a mining town: gold was discovered there in the late 19th century, then uranium production became important following the second World War. It is known as the “Mineral Capital of Canada” and hosts the annual Rockhound Gemboree, the nation’s largest gem show, which draws thousands of tourists. In fact, the town pulls in 150,000 visitors each year; combined with a regional population of 60,000, it is the retail and service centre for the North Hastings Region.

According to Bancroft’s economic development committee, the town has enjoyed a 28% increase in job creation since 2001, almost double that of the Ontario average. The addition of high-speed Internet to the majority of the region has made it all the more plausible for city transplants to set down new roots, and for a fraction of the cost. Zoocasa’s Average Price Index for all Bancroft properties was $292,733 in 2020, 47% below the national average of $557,269 and literally hundreds of thousands of dollars less than in Ottawa or Toronto. Those who’ve bought in recent years have also enjoyed a nice return; this index has increased 78% over the last three years, translating to a cash increase of $128,533.

Bancroft buyers truly have a plethora of housing options to choose from. There is opportunity to live in Canadian Shield cottage country, with more than 70 lakes a stone’s throw away, making the area perfect for outdoor and water sport enthusiasts. However, those who choose to live within town limits will enjoy the walkable appeal of Bancroft’s downtown. There are local primary and high school options for families settling in the area, and a full array of established municipal services, as well as a mature arts and culture scene.

Pre-COVID real estate market

Bancroft and area real estate has enjoyed stable demand over the long term, with the composite Home Price Index rising steadily over the last five years, though still well below the average for nearby urban centres. Buyers from other cities typically sought secondary seasonal vacation homes in the area, or purchased empty lots with the intention of building cottages.

Impact of COVID

As in the rest of Ontario, local real estate demand froze as the lockdown mandate took hold in March 2021—but the slowdown was short-lived. As more people were able to work from home, and as restrictions were lifted in cottage country sooner than in big cities, an exodus of urban transplants made their way to the area as early as May 2020, according to the Bancroft & District Real Estate Board. Bidding wars and home sales for well over list price are now commonplace, which has put upward pressure on prices. 

Future outlook

The Canadian Real Estate Association reports the average price for Bancroft hit $576,177 in March 2021—an 86.6% increase from the previous year. Listings bounced back as 64.7% more homes came to market, though overall inventory reveals just how competitive the marketplace has become, with just 0.7 months of housing stock—the lowest in three decades. This metric refers to the number of months it would take to completely sell off all available homes on the market, according to buyer demand.“Buyer demand is hot in Bancroft, and for good reason,” says Lauren Haw, Broker of Record and CEO of Zoocasa Realty. “With the supply and demand gap continuing to deepen in the region, we think home values will continue to rise for the foreseeable future.”

2 – WOODSTOCK-INGERSOLL, ONT.

Pre-pandemic, when newcomers visited the “Friendly City” of Woodstock, it was mainly for sightseeing; this historic city is known for its picturesque downtown core full of original centuries-old architecture, cobbled sidewalks and gardens. These days, however, visitors come from across Ontario with home buying intentions, snapping up local listings, and putting the boil under home value appreciation.

Why we’re watching Woodstock and Ingersoll

It’s not hard to see why this southwestern Ontario city has become such a popular draw for buyers, and has secured the second-highest spot in MoneySense’s Where to Buy in 2021 ranking with a score of 4.2 stars. Part of Oxford County, Woodstock and the neighbouring town of Ingersoll are within easy access of two major cities; London is a mere 43 km away, and the City of Toronto at 128 km. There’s also direct access to Highway 401.

While the area has a strong rural history rooted firmly in agriculture, its economy is based on manufacturing, particularly in the auto sector; the Toyota plant is Woodstock’s largest employer, with General Motors and TigerCat also running operations there. The education sector is a top public employer, with three school boards, and Fanshawe College campus within city limits. There are six secondary schools and 15 elementary schools within the city, offering both French, English and French-immersion curriculums.

According to Statistics Canada, Woodstock had a population of 40,902 people in 2016, which has been growing steadily over the last decade. The unemployment rate at the time of the Census was 5.2%, below the national rate of 7.5%.

In addition to its small-town charm within a city, culture and culinary scene, there is an abundance of green space, hiking trails and fishing ponds in the region, making it the perfect destination for families seeking a slower pace of life with great school options and big-city amenities such as charming local retail and farm-to-table dining experiences.

Pre-COVID real estate market

Pre-pandemic, Woodstock-Ingersoll had experienced fairly hot price appreciation over the long term; according to CREA, the Average Price Index for all home types in Woodstock-Ingersoll grew 19% year over year to $433,383 in 2020, and a whopping 67% over the past three years, an appreciation of $173,383.

However, as buyers gained the flexibility to work from anywhere, the city has been overwhelmed with interest following the first wave, resulting in record-low inventory, at just 0.4 months of supply (down from 1.8 months the year prior). 

Impact of COVID

According to the Woodstock-Ingersoll & District Real Estate Board, the market has rebounded strongly following the initial impact of the first COVID-19 lockdown. There were 204 sales in March 2021, up 58.1% year over year, with a total of 401 sales in the first quarter, up 11.1% year over year. The average price of homes sold in March 2021 was a record $654,434, a large gain of 38.1% from March 2020.

The board reports the city has experienced 11 straight months of double-digit year-over-year percentage gains in prices, and is on track for a hot spring and summer.

Future outlook

“The largest challenge facing Woodstock-Ingersoll is a lack of supply, pure and simple,” says Lauren Haw, CEO and Broker of Record at Zoocasa Realty. “As it’s a smaller market, there just aren’t enough listings to keep up with non-local buyer demand. Those who already own a home in Woodstock-Ingersoll will be sure to see attractive price appreciation as long as the pandemic prompts buyers to look at farther-flung markets, while those looking to call the city home should be prepared to encounter multiple offer situations and potential bidding wars.”

3 – LONDON – ST. THOMAS

The City of London may be best-known as a college town, home to both the University of Western Ontario (UWO) and Fanshawe College—and while it certainly boasts a vibrant downtown frequented by students for its bars, dining, and entertainment options, home seekers love the region for its wide variety of neighbourhoods, access to nature, and strong job market.

London is also known for its comparatively inexpensive real estate, as detached houses can be had for a fraction of what they’d sell for in other major urban centres, while those already in the market have enjoyed steady value appreciation over recent years. These factors have put the city in the top three of our Where to Buy Real Estate in 2021 ranking, with a score of 4.18 out of 5 stars.

Why we’re watching London – St. Thomas

The largest municipality in southwestern Ontario, and the 11th largest in Canada, the London–St. Thomas region is well-situated on the Quebec City-Windsor Corridor, located between Toronto to the north and Detroit to the south. It includes a number of towns and counties including St. Thomas, Strathroy, Middlesex County and Elgin County. The City of London proper has a population of 383,822, according to the 2016 Census.

A strength that has set the region apart is its economic resilience. When London’s auto-manufacturing industry was gutted by the mid-2010’s recession, the job market pivoted to focus on healthcare, education and IT. London is now a tech hub, home to many digital startups and midsize companies, a number of which have set up offices in the former industrial buildings in the downtown core. Its hospitals are among the top 10 employers for the population, while UWO is a centre for medical research and supports the local educational workforce. The manufacturing industry has recovered in recent years, with General Motors and Toyota running operations in the area. The insurance industry also has a well-established presence in the city, which is home to London Life and Canada Trust.

The local unemployment rate was 7% in 2021, below the national average of 7.5%.

Those looking to live here will enjoy all the amenities a big city has to offer, as London has a well-established arts, culture, and music scene, and hosts many festivals annually. It also offers nature lovers plenty of opportunity to get outside; the Thames River forks through the centre of the city, and there are a number of large parks with trails such as Springbanks Park, Victoria Park, Gibbons Park and the Fanshawe Conservation Area.

Pre-COVID real estate market

London-area real estate has enjoyed steady demand and value appreciation in recent years, and the supply of homes for sale was already historically low prior to the impact of COVID-19.

According to the London & St. Thomas Association of Realtors (LSTAR), there was every indication the market was poised for a busy spring in February 2020 with 740 sales, clocking in 23.7% higher than the previous year and home prices increasing 13% to an average of $445,535. Inventory was the lowest it had been in 10 years, at 1.8 months. Zoocasa’s Average Price Index reveals a price of $436,433 across all home types in 2020, an increase of 16% year over year, and 77% over three years.

Impact of COVID

Like most housing markets across Ontario, the London–St. Thomas region absorbed a temporary plunge as lockdown requirements took hold in April 2020. The number of homes trading hands fell more than 50% to 469, the lowest volume of April transactions since 1978, and 55% below 10-year levels.

As open houses were prohibited due to social distancing guidelines, sellers were hesitant to enter the market, causing listings to fall 50.3% year over year. Average home prices in London remained flat, inching up 0.4% to $423,143.

The market remained below seasonal activity throughout May, but had bounced back by June due to the reopened economy and renewed buyer appetite. Sales soared 13.8% from the year prior at 1,188 transactions, and up 77.8% from May. Prices rose 17.8% annually to $473,998, while the sales-to-new-listings ratio (SNLR), hit 78.5%, indicating a strong sellers’ market. In all, LSTAR reports it was the second biggest June ever.

Future outlook

As has been the case with many smaller- and mid-sized cities in southern Ontario, London real estate has remained in consistently high demand throughout the pandemic. As more buyers now have a work-from-home lifestyle, they’ve widened their home search net; with its big-city amenities and comparatively lower price tag, London has been a particularly attractive buyer destination.

That has pushed housing supply even lower, and is putting upward pressure on prices. As of March 2021, there was just 0.4 months of inventory on the market, while sales soared by 56% to 1,296 transactions—the hottest March on record—and the average price rose to $634,799.

“Overall, we’ve had a huge increase in demand due to COVID as buyers are able to work remotely and are attracted to London for its lower average prices, great community feel and the ease of getting to GTA if need be,” says local real estate agent Meghan Caddey.

“Young families like London for its larger backyards and variety of outdoor activities—the bike path that runs across the city is especially popular. The city is also attractive to retirees because it has a small town feel, great hospitals, and it’s easy to get around.“

Caddey adds in addition to resale properties, demand is booming for new builds, with many buyers on wait lists as developers release more lots.

METHODOLOGY

To determine which cities and neighbourhoods offer home buyers the greatest value in 2021, we took a look at the data from top real estate markets across Canada. Various cities, regions and neighbourhoods are ranked against each other within the same geography, where possible. 

Overall rankings and score measures consider the current average home price, price growth in recent years, as well neighbourhood characteristics and economics. Value and neighbourhood economics are equally weighted within the overall score evaluation. All rankings are based on data available at the time of publishing. 

Value and home growth

We considered the 2020 average home price relative to the overall regional average and normalized it against adjacent neighbourhoods, with more affordable home prices contributing positively. The ranking calculation also takes into account the one-year, three-year and five-year home value growth, with more weight assigned to the recent growth and decreasing value weight contributed when including previous time periods. Recent comparables are better indicators than sales from five years ago. However, a positive and steady trend of home value growth was also considered in the overall calculation.  

Neighbourhood economics

This considers the percentage of households who own versus rent, education level ranges as a percentage in each household, median incomes of individuals and overall household income levels, as these are all factors in evaluating economic and affordability indexes. 

We’ve presented additional regional preference factors that are not used to calculate the ranking, but do offer insight on the neighbourhood amenities, accessibility and percentage of households with children. This can assist in assessment of the lifestyle that might be associated with each area.

Data is sourced and made available from the following: Statistics Canada, Canadian Real Estate Association (CREA), Toronto Regional Real Estate Board (TRREB), Barrie & District Association of Realtors (BDAR), Nova Scotia Association of Realtors (NSAR), Real Estate Board of Greater Vancouver (REBGV), Calgary Real Estate Board (CREB), Realtors Association of Edmonton (RAE), WalkScore.